Ann: Entitlement Offer Announcement , page-2

I must admit I didn't see this coming...but now we know how they are going to get rid of the $250m debt blister maturing March 31 2014.

This to me indicates either or both of the following:

The $200m of non core assets under due diligence are not proceeding as well as expected and/or

FKP was struggling with getting the $250m debt refinanced.

Whilst I'm not happy I will take up my entitlement because of these reasons

(a) FKP will save just under 9% on interest
(b) FKP will then be debt to equity comparable with its peers in the retirement space (Ryman, Metlifecare and Summerset)
(c) FKP could use the cash to ramp up its unit construction in the retirement villages and hopefully the build up of its care facilities.

Having examined Ryman, which is trading at 508% of its NTA, the essential differences between it and FKP are these:

(1) Ryman last year produced 700 new development units...FKP did a lousy 45!Sure, the focus last year was on reducing stock but still this is pretty indicative of a good company v a lousy company
(2) Ryman has a massive 2,400 care beds, FKP have jack!

Oh yeah, and what about this essential difference, the following quote was taken from the last Ryman annual report:

"The proof of our capital efficiency is demonstrated by our long term cash flows. We raised $25m in 1999 - and since then we have invested over $1.2bn building new villages and have paid out a growing dividend stream of $290m

We have achieved this without raising any capital from our shareholders, and while maintaining a conservative balance sheet."

Just imagine what the FKP price could do if we could go even half way towards achieving this!

Final Comment: I bet the Stockland financial officer is livid at this announcement!